Understand how bitcoin works in just over 3 minutes | Elevator Pitch


Do you know what blockchain is? Not
really. Do you know what Bitcoin is? Sort of. It’s digital money that people use
computers to mine and it’s worth heaps and it’s really unstable and it might be
the way of the future and I think bitcoins are made with blockchain. Err.. I’m going to ask a computer scientist to break it down for me in a time it takes
an elevator to go from the bottom of the building up to the top and then all the
way back down, which kind of looks like a long time but I don’t think it is going
to be because what is blockchain? Let’s go see. Oh, I could have gone! Hi Richard. Hey Rad. So you’re ready to
do this? Yeah challenge accepted. Are you excited to teach me everything you know?
You’re making me tense. It’s only one elevator trip. What’s the worst that could happen?
Bruce Willis. Ready? What is blockchain? Blockchain is a way
of taking information, electronic information, and making it unchangeable
so people can’t tamper with it in the future. But it’s related to money isn’t
it? It’s often used for money, for crypto- currency like Bitcoin, to keep a track of
all the transactions that have happened so people can’t lie about them later on.
Okay so the Bitcoin is like the cash and the blockchain is the ledger? It’s a
ledger exactly right. Sso why would people pick cryptocurrency over other forms of
money? Mainly it’s because it doesn’t need any trust. You don’t need to trust
third parties like PayPal. They actually just passed around to everyone. Multiple
people have it so if you try and change it there’s multiple other guys. Yeah yeah
okay and what is a blockchain like what block and chain? Yeah. Yeah so the
block is where you store the transactions so you can think of it as
like, I don’t know, the transactions are lining up outside. There’s a taxi coming. The first taxi that pulls all jumps on – that’s the block. It holds all the
transactions. Yep. To create a block you need to solve a puzzle. We’re halfway, at the top. Are you halfway through explaining? Yeah definitely. The puzzles is the
interesting bit. All right so what are the puzzles? When the blockchain protocol was set up initially they designed a schema – a way of generating an infinite
sequence of puzzles. Each puzzle takes about ten – you can’t shut the door! Each puzzle takes about ten minutes to solve with lots of computing power. Everyone’s working
flat-out to solve them because the person that solves the puzzle gets to make the
next block and every time you make a block you get paid some money. And no one
owns the puzzle? No one owns a puzzle the puzzle is just the rules of maths. No one
knows the answer until you find it. Okay. And the neat thing about it is each
puzzle relates to the previous solution, to the previous block. So the blocks are
tied together in that way. That’s what gives us a chain. The blocks
are all linked together by the ways the puzzles are structured so if you wanted
to change your block later, you’d actually have to change all the ones
after it because all the puzzles would be different. That makes it…
it’s hard to frauder. So is this the best way to be having
money now, in 2019? So it’s good because you don’t have to trust the government or anyone
like that but it’s risky because if something goes wrong then of course
everything’s lost. So why are we doing it then? Can it be used for anything else? There’s so much hype I’m really glad you asked. This is a 187 things that people claim it can be used for other than cryptocurrencies. Cancer!
Yeah it solves cancer, it solves global warming, it solves AIDS, and also online sales of
classic Japanese domestic cars. Is any of this real? This is the problem it’s great for cryptocurrency it’s not clear that it’s good for anything else
but everyone wants to use it so everyone talks about it all the time. Well this is
my floor so I guess I’ll go read this. Thank you so much Richard. A real pleasure Rad. See you round. Except what do I do now? So I think I know what blockchain is now. Basically it’s a ledger where there are blocks that are the carriers for transactions
and you get a block by solving a mathematical puzzle and when you create
the block you get some money. So you’re paid for having the block which carries
the transactions and then that block gets put into a chain and they’re all
linked together so that you can’t fake it. You have to have the previous block
in the chain to be able to have the new block and that’s what makes it safe. But
it’s not really safe – this is the really scary part – if everyone just stops
working on it it will cease to exist and that’ll be it. It’s crazy so I’m
really interested to see if any of this list comes true particularly whether it
can solve a whole lot of problems? Hopefully? Hey, I hope you enjoyed this
little shortcut to smartness. Richard also actually has a lot of videos up on YouTube of his lectures about computer science and these are proper lectures
you can basically get a uni degree for free so if you want to see any of those
we will put the link in the description and you can go check it out. If there’s
any big topics that you would like us to make elevator sized and then let us know
in the comments below and you know I’ll see what I can do for you. Thanks for
watching.

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